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Thursday, June 27, 2013

Mayor says luring NHL’s Coyotes would have been bad business deal for Kansas City

(editor's note: this story originally appeared in the Kansas City Star on June 20th. It is posted here in its entirety for posterity's sake, because The Star's online articles tend to disappear quickly. This article is not written by anyone associated with Lost City of Bettman.)June 20

BY RANDY COVITZ

The Kansas City Star

Whether the NHL’s Phoenix Coyotes remain in Arizona or move to Seattle, Mayor Sly James does not regret that Kansas City didn’t do more to attract the club to the Sprint Center.

After investigating the possibility of pursuing the Coyotes — who have been losing money while under NHL ownership since 2009 — James was convinced the franchise would have been a bad business deal for Kansas City.

“Several months back, even before that, we put out some feelers and talked to some people we trusted who knew what the situation was … the availability, the costs …” James told The Star on Thursday, “and the basic information was (the Coyotes) need a lot of money from the city in one form or the other. They said, it’s not a great deal for you, like you might hope.

“The question was, ‘What would it take?’ The answer was, ‘A whole hell of a lot. It might take you from a (profit) to a negative.’ It wasn’t something recommended to be done.”

Renaissance Sports Entertainment, a group out of Canada which has been approved to buy the Coyotes from the NHL, is seeking a reported $15 million a year from the Phoenix suburb of Glendale, Ariz., to operate the Jobing.com Arena. Glendale has budgeted $6.5 million per year, according to the Arizona Republic, and if the two sides don’t come to an agreement by July 2, the Coyotes could be sold to interests in Seattle, where the team would play at Key Arena until a new facility was built.

Handing over a multi-million dollar subsidy to the new owners is simply too much, said James, considering the Sprint Center is turning a profit each year for the city. According to the mayor’s office, Kansas City has received nearly $8 million in profit-sharing payments in the Sprint Center’s first five years of operation.

“We were told, you should continue to look for a team, you’re in a good enough situation, where you have an arena that is working,” James said. “It’s not like we’re desperate or have an arena that is dark and not making money. You don’t have to jump at a deal just because something is out there.”

According to Pollstar Magazine’s annual report, Sprint Center was the sixth-busiest arena in the United States in 2012 and No. 22 in the world. Even without an anchor tenant, Sprint Center provided $1.85 million to the city in 2012 through its profit-sharing agreement.

Still, the mayor is not giving up on bringing an NHL or NBA franchise to Kansas City.

“Our position is, if there is a good deal out there, that makes sense, then, yeah, let’s take a serious look at it,” James said. “But if it’s going to be something that is more risk than we possibly want to take on, let’s not do that. Right now, we don’t have an offer, there’s nothing out there.”

Of course, the other part of the equation to bring a team to Kansas City is identifying ownership. Both the new Phoenix group and prospective Seattle group are from out of the area and if AEG — which operates the Sprint Center — has an ownership group waiting in the wings for Kansas City, it is not saying.

“I’m not aware of a group,” James said. “That was part of the early discussion, whether there was a group that could step up … my understanding was there was not a group.

“Doesn’t it seem like if we really want to get in the game, we need some people here who have some money who are willing to get in the game?”

Los Angeles-based AEG has undergone a change in leadership in recent months with Dan Beckerman taking over as president and chief executive officer in place of Tim Leiweke, who now runs the company that owns the Toronto Maple Leafs, Toronto Raptors and Toronto FC.

Repeated attempts to reach Beckerman have been unsuccessful, so it is unknown whether AEG — which owns the NHL’s Los Angeles Kings — has an interest in identifying a buyer for the Coyotes if they fail to reach an agreement with Glendale or Seattle.

“We are continuing to follow the lead of the NHL, so we are unable to comment regarding specifics as it relates to the Phoenix deal,” said Shani Tate, the Sprint Center’s director of communications and marketing.

The NHL Board of Governors is scheduled to meet on June 27 and hoped to approve the sale of the Coyotes. The league has yet to release its 2013-14 schedule, and it reportedly has several versions, depending on where the Coyotes are playing.

Sprint Center does not have an NHL preseason game scheduled for this fall, though Tate said that has nothing to do with the Coyotes’ situation. She did say, however, that if the opportunity were to arise, the facility can work with the NHL on scheduling needs.

“We are always making preparations, whether it relates to scheduling and making sure we are involved in the necessary conversations,” Tate said. “However, it needs to be the most responsible thing and making sure our partners at the city are also involved. We are paying close attention to the situation in Phoenix.”

Kansas City’s reluctance to underwrite the cost of the Coyotes or any NHL or NBA franchise could preclude any franchise from moving to the Sprint Center, because most clubs will demand shares of revenue from suites, concessions, parking, signage, sponsorships and other amenities.

AEG offered the Pittsburgh Penguins a favorable lease before the arena even opened in 2007, only to see the team leverage that deal for a new arena in Pittsburgh. James agrees that most clubs would want a favorable lease as well. But not all situations are the same. There’s only one Sidney Crosby.

“Let me ask you this,” James said. “Which would you rather have, the Pittsburgh Penguins or the Phoenix Coyotes? Who do you think would make more money for the city in the long run?”